Budget 2019: India’s Current Account Deficit Within Manageable Levels, Says Economic Survey

Although the Current Account Deficit increased to 2.1 per cent of GDP in 2018-19, up from 1.8 per cent in 2017-18, it is within manageable levels, stated the Economic Survey.

Published: July 4, 2019 5:31 PM IST

By IANS

Current Account Deficit
Current Account Deficit

New Delhi: India’s current account deficit is within manageable levels, the country’s Economic Survey 2018-19 said on Thursday.

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The current account is the net difference between inflows and outflows of foreign currencies.

According to the survey, although the CAD increased to 2.1 per cent of GDP in 2018-19, up from 1.8 per cent in 2017-18, “it is within manageable levels”.

“The widening of the CAD has been driven by a deterioration in the trade deficit from 6 per cent of GDP in 2017-18 to 6.7 per cent in 2018-19,” said the survey, tabled in the Parliament by Finance and Corporate Affairs Minister Nirmala Sitharaman.

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“Rise in crude oil prices in 2018-19 led to the deterioration of trade deficit.”

However, acceleration in the growth of remittances prevented a larger deterioration of CAD.

As per the survey, in funding the CAD, the total liabilities-to-GDP ratio, inclusive of both debt and non-debt components, has declined from 43 per cent in 2015 to about 38 per cent at end of 2018.

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“Further the share of foreign direct investment has risen and that of net portfolio investment fallen in total liabilities, thereby reflecting a transition to more stable sources of funding CAD.”

In sum, although CAD to GDP ratio has increased in 2018-19, the external indebtedness continues to be on a declining path.

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Published Date: July 4, 2019 5:31 PM IST